ConsenSys Names DeFi Farming “Number One Threat” To Successful Ethereum 2.0 Launch
Successful launch Ethereum 2.0 may be hampered by “farm” projects from the decentralized finance (DeFi) space. This opinion was expressed by the authors of the new report of the Ethereum studio ConsenSys.
High profitability from providing liquidity to DeFi projects, sometimes exceeding 1 000% per annum, caused lifting of this space in late summer. Since then, rates have dropped significantly, but investors still go for payouts that exceed most other existing offers, despite the inherent risks.
Ethereum 2.0 is an largest to this day updating blockchain the second largest cryptocurrency by market capitalization and will lead to change consensus mechanism with Proof-of-Work on Proof-of-Stake. IN new model users will be transfer your assets to staking, thus completing the tasks of today’s miners for validation transactions and security networks.
“If various DeFi protocols will offer more high profitability, than can offer Eth2 on staking, ETH holders may prefer direct their assets elsewhere, thus leaving Eth2 without the required amount of ETH to provide him sufficient security and decentralization, “the report says.
The authors are confident that they have a legitimate concern per future cryptocurrencies. According to their words, at best, ETH holders will want to wait for the first results to compare the profitability of staking and DeFi, and at worst, massively decide do not contribute assets in Eth2, where they are will be blocked until phase 1.5, “before which, probably no less of the year“, To have possibility liquidate their in case of a significant increase in the rate for this time.